By letter dated June 3, 1992, Quaker rejected DPW's settlement offer and further noted that appeals of claim denials must originate "from an employee or an employee's designated agent. It appears that you do not represent a participant nor a beneficiary under the Plan. Therefore, we cannot find any basis for considering your letter as an appropriate appeal." Exhibit C to Complaint. In its letter, Quaker further indicated that had an appropriate appeal been made, it would continue to deny payment of benefits because, inter alia: (1) "Quaker's Plan [was] neither the primary nor the secondary coverage entity"; (2) the claim was submitted "beyond reasonable time limits for considering a claim"; (3) "We found no record of an appeal being filed with the Administrator by a participant or beneficiary" within the required sixty day time limit. Id. DPW filed its complaint on August 11, 1992.

III. Discussion

In support of its motion to dismiss, Quaker argues that DPW lacks standing to sue for an alleged ERISA violation because it is neither an ERISA plan participant
*fn2"
or beneficiary,
*fn3"
nor able to gain beneficiary status by virtue of Hickey's (the plan participant) assignment of payment of benefits to it. Section 502 of ERISA, 29 U.S.C. § 1132(a), provides:

A civil action may be brought --

(1) by a participant or beneficiary --

(A) for the relief provided for in subsection (c) of this section, or

(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under terms of the plan.

First, Congress simply made no provision in § 1132(a)(1)(B) for persons other than participants and beneficiaries to sue, including persons purporting to sue on their behalf. Second, the intentions of the parties and the district court regarding federal jurisdiction are irrelevant to the determination whether such jurisdiction exists. Third, [the plan beneficiary] did not, in fact, make an assignment of her claim to the IGLWU Fund, and it is far from clear that, in litigating this case, the ILGWU Fund pursued only [the plan beneficiary's] interests. Moreover, even if [the plan beneficiary] had actually assigned her claim to the ILGWU Fund, we have serious doubts whether she could assign along with her substantive rights her right to sue in federal court. Cf. McSparran v. Weist, 402 F.2d 867 (3d Cir. 1968) (minor cannot manufacture diversity jurisdiction by appointing out-of-state guardian to prosecute suit).

The Court concedes the attractiveness of plaintiff's position. Northeast Dept. is factually distinguishable from the case at bar, which involves an actual assignment, and the dicta from that case is not binding. Further, as the Ninth Circuit noted in Misic, ERISA's elaborate proscription against assignment of pension benefits, 29 U.S.C. § 1056 (d)(1), is inapplicable to welfare benefit plans. Misic, 789 F.2d at 1376.

42 U.S.C. § 1396k provides that State medical assistance plans "shall provide, that as a condition of eligibility for medical assistance under the State plan", individuals must assign to the State any rights to "payment for medical care from any third party." 29 U.S.C. § 1144(d) provides that, "Nothing in this subchapter shall be construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States. . . ." Plaintiff argues that ERISA should not be interpreted so as to withhold standing from assignees when the Medicaid statute requires State welfare agencies to obtain an assignment of benefits.

I am not persuaded by this argument. The Medicaid statute cannot by its mandatory assignment provision confer standing upon assignees, and therefore federal jurisdiction for an ERISA civil enforcement action. Furthermore, not conferring standing to sue under ERISA upon assignees is not the same as impairing the Medicaid statute's mandatory assignment provision, though it obviously makes ERISA's civil enforcement scheme more cumbersome. See Health Scan, Ltd. v. Travelers Ins. Co., 725 F. Supp. 268, 270 n. 2 (E.D.Pa. 1989).

Plaintiff's final argument is that the Court should fashion a cause of action from federal common law, in which case jurisdiction would be proper under 28 U.S.C. § 1331. As plaintiff notes, the Northeast Dept. court did precisely this after holding that 29 U.S.C. § 1132, ERISA's civil enforcement provision, does not authorize federal jurisdiction over actions brought by one pension fund as assignee against another pension fund. The court reasoned that ERISA's failure to expressly grant jurisdiction was irrelevant so long as the plaintiff's claim arose under federal common law. Central to the court's decision was the fact that a law relating to things federal is a law "of the United States" for purposes of 28 U.S.C. § 1331 (federal question jurisdiction), even if it is judge-made common law. Northeast Dept. ILGWU, 764 F.2d at 155. The Northeast Dept. court determined that an assignee's claim for ERISA benefits is one that arises under federal law because it is governed by the federal common law of employee benefit plans. Id. at 157 (citing Franchise Tax Board of the State of California v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 26, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983) ("the meaning and enforceability of provisions in [a] trust agreement . . . come[] within the class of questions for which Congress intended that federal courts create federal common law"). Therefore, federal jurisdiction was proper under § 1331. Cf. Illinois v. City of Milwaukee, Wisconsin, 406 U.S. 91, 31 L. Ed. 2d 712, 92 S. Ct. 1385 (1972) ("§ 1331 jurisdiction will support claims founded upon federal common law as well as those of a statutory origin").

Defendant contends that the Northeast Dept. holding "must be seriously questioned in light of" Massachusetts Mutual Ins. Co. v. Russell, 473 U.S. 134, 87 L. Ed. 2d 96, 105 S. Ct. 3085 (1985). In Massachusetts Mutual, the Supreme Court of the United States declined to find an implied right of action under ERISA for a beneficiary seeking extracontractual damages. The Court stated:

The six carefully integrated civil enforcement provisions found in § 502(a) [ 29 U.S.C. § 1132(a)] of [ERISA] as finally enacted . . . provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly. The assumption of inadvertent omission is rendered especially suspect upon close consideration of ERISA's interlocking, interrelated, and interdependent remedial scheme, which is in turn part of a "comprehensive and reticulated statute."

Id. at 146 (citation omitted). Thus, courts have very little freedom to create federal common law causes of action beyond those specifically enumerated in ERISA.

Notwithstanding the Supreme Court's admonition in Massachusetts Mutual, plaintiff's argument based on federal common law is meritorious. As the United States Court of Appeals for the Third Circuit has explained, the appropriate inquiry when faced with a request to create a federal common law right of action "is whether the judicial creation of a right in this instance is necessary to fill in interstitially or otherwise effectuate the statutory pattern enacted in the large by Congress.'" Plucinski v. I.A.M. Nat'l Pension Fund, 875 F.2d 1052, 1056 (3d Cir. 1989) (citation omitted). Granting assignee standing to bring a federal common law action analogous to a § 1132(a)(1)(B) action does effectuate the statutory pattern of ERISA, for it protects employees' contractually defined benefits through the assignee, who merely "stands in the shoes" of the plan participant. Psychiatric Institute of Washington, D.C. v. Connecticut General Life Ins. Co., 780 F. Supp. 24, 30 (D.D.C. 1992) (citing Misic, 789 F.2d at 1378). The Third Circuit's holding in Northeast Dept. that an assignee's attempt to enforce ERISA's substantive rules states a claim under federal common law remains unaffected by Massachusetts Mutual, and is dispositive of the case at bar. An appropriate order follows.

ORDER

AND NOW, this 28th day of October, 1993, consistent with the foregoing opinion, defendant Quaker Medical Care and Survivor Plan's Motion to Dismiss (Docket No. 4) is hereby denied.

BY THE COURT,

D. Brooks Smith

United States District Judge

Our website includes the main text of the court's opinion but does not include the
docket number, case citation or footnotes. Upon purchase, docket numbers and/or
citations allow you to research a case further or to use a case in a legal proceeding.
Footnotes (if any) include details of the court's decision.

Buy This Entire Record For
$7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.